Diversification to continue at pace
Crestbridge: Best Fund Administrator – Technology – As diversification continued to be critical amid the general disruption experienced this year, private equity managers have sought increasing assistance to support their expansion across domiciles and asset classes.
“Diversification has really emerged as a key trend over the past year. This has played out in the funds space with funds managers diversifying across domiciles, asset classes and reviewing their key investment focus and investment strategies,” outlines Alex Di Santo, Group Head of Private Equity Fund Services, Crestbridge. “A really good example is the increasing trend among private equity managers establishing SPACs (Special Purpose Acquisition Companies) to support their investment portfolios.”
Di Santo also notes an increase in the number of debt funds being raised, in particular within the distressed, real estate and venture debt arenas.
In terms of services required on these dimensions, PE managers looking to enter a fund domicile for the first time, for example, would need support from an expertise perspective. “They will also need our support from a resourcing perspective given we are very much seen as an extension of their team,” Di Santo says.
He expects diversification to continue at pace as managers hunt for yield in an increasingly competitive market: “This will include diversification by strategy and a focus on new niche sub strategies.” The healthcare and technology sectors have seen considerable investment over the past 12 months and within these fields, one can identify examples of new strategies which have the potential to perform, such as investments in supply chain technology.
Commenting on the future of technology, Di Santo says: “The use of artificial intelligence and robotics will become more prominent both at client and service provider level as we together tackle the increased need for granular reporting and regulatory compliance. Artificial intelligence is already being used by managers for sourcing investments, investment due diligence and monitoring investor behaviours and this will increase.”
Managers are also facing operational challenges in their efforts to meeting rising investor demands and increasing reporting requirements. Di Santo underscores: “There is also growing need for reporting in emerging areas such as ESG. Managing large volumes of data is becoming increasingly challenging for our clients, and that’s where technology is critical to facilitating the increased levels of reporting.”
Technology is changing the private equity space and Crestbridge believes it’s important to be well positioned so as to fully support clients for the long term. “As an organisation, Crestbridge has a very clear technology roadmap that sets out where we think the industry will be in 5-10 years’ time, as well as our plans for the business during this timescale. We are a very innovative business and it’s important that we continue to invest in technology and people,” Di Santo points out.
The firm invested heavily in its platforms, and tailors, develops and supplements its technology to meet the needs of its clients. An example of this is its integrating specialised carry calculation, management fee calculation or debt servicing software which symbolises client driven customisation.
Alex Di Santo, Group Head of Private Equity Fund Services, Crestbridge
Alex Di Santo has over 17 years’ experience in the financial services industry, and has significant specialist expertise in private capital covering private debt and private equity (spanning venture, growth and buyout). As Group Head of Private Equity, Alex is responsible for the development and implementation of Crestbridge’s private equity fund services strategy including maintaining the highest levels of client care. He will have additional responsibilities in raising the business’ profile in the private equity fund services space, as well as identifying and targeting new and strategically important revenue opportunities.